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Which of the following contract types has the highest risk to the contractor?

 

A. Time and material (T&M)

B. Firm fixed price (FFP)

C. Firm fixed price (FFP)and Time and material (T&M)

D. Cost plus incentive fee (CPIF)

E. Cost plus fixed fee (CPFF)

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Question ajoutée par Muhammad Farooq , QA-QC MANAGER , AL Bawani contracting co.
Date de publication: 2016/07/15
Moosa Rawoot
par Moosa Rawoot , HR Officer , Petroleum Coke Industries Co.

A Firm Fixed Price Contract (FFP):  Once the contract is signed, the contractor is legally bound to complete the task within the agreed amount of money or time. Since the contractor has to complete the task within a fixed amount, he bears the risks. Any cost increase due to bad performance of the Contractor will be the responsibility of the Contractor.

Sambit Mohanty
par Sambit Mohanty , Senior Planning Engineer , Tristar Engineering and Construction LLC

Firm Fixed Price has the highest risk to the contractor. The contractor is under the maximum uncertainty.

Dave Diamon
par Dave Diamon , Contracts Manager , Upon Request

FFP. Moosa's answer is correct and very complete. 

Ksenija Kancelak
par Ksenija Kancelak , Construction Project Manager , City of Koprivnica, Koprivnica (Croatia)

I think that the right answer is:

B. Firm fixed price (FFP)

 

Utilisateur supprimé
par Utilisateur supprimé

D & E, because, it is highly uncertain to ascertain the labor hours, material requriements, period etc., necessary to perform the contract. If the costs or anything non forecasted or not considered, the cost of the contract graph will be steeply increase.

Carlos Hernandez
par Carlos Hernandez , Document Controller , China Camc Engineering Co Ltd

There is a combination of two options, since Option B (FFP) is not enough dangerous if the the option E (CPFF) doesn´t exist in the project.

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